VA Income and Bankruptcy

If you receive VA disability or other veterans’ benefits and are considering filing Chapter 7 bankruptcy in Florida, one of the most common questions is:

Does VA income count as income for Chapter 7 bankruptcy?

The short answer is: usually no — but it depends on the type of VA benefit and how your case is structured. Below is a clear, Florida-specific explanation.

What Is “Income” in Chapter 7 Bankruptcy?

When you file Chapter 7, the court looks at income in two main ways:

1. The Chapter 7 Means Test – determines if you qualify

2. Schedule I (Monthly Income) – shows your ability to pay ongoing expenses

VA benefits are treated differently than regular wages in both places.

VA Benefits and the Chapter 7 Means Test

For purposes of the Chapter 7 means test, most VA benefits are excluded from “current monthly income.”

VA Benefits That Are Typically Excluded

• VA disability compensation

• VA service-connected disability payments

• VA pension benefits

• VA Aid & Attendance benefits

These benefits do not count toward the income limits that determine Chapter 7 eligibility.

This exclusion is similar to how Social Security benefits are treated under federal bankruptcy law.

VA Income on Schedule I (Monthly Income)

Even though VA benefits are excluded from the means test, they may still appear on Schedule I, which lists your actual monthly income.

This does not automatically disqualify you from Chapter 7.

Why?

• Schedule I is informational

• The key question is whether you have disposable income after reasonable expenses

• VA benefits are protected and generally not required to be paid to creditors

Florida bankruptcy courts routinely allow Chapter 7 cases where VA income is the primary or sole source of support.

Are VA Benefits Protected From Creditors?

Yes. In most cases:

• VA disability and pension benefits are exempt from creditor claims

• They are protected even after being deposited into a bank account (as long as they are traceable)

• Creditors generally cannot garnish VA disability income

This protection continues during and after bankruptcy.

What About VA Retirement or Military Retirement Pay?

This is where the analysis changes.

• Military retirement pay is usually considered countable income

• It does count for the Chapter 7 means test

• It does not receive the same exclusions as VA disability compensation

If you receive both VA disability and military retirement, the income must be analyzed carefully.

Florida Chapter 7 and VA Income: Practical Example

Example: A Tampa veteran receives:

• $3,200/month in VA disability

• No other income

Even though the veteran has no wages:

• The VA income is excluded from the means test

• The veteran typically qualifies for Chapter 7

• Credit card and medical debts can be discharged

Can You File Chapter 7 Using Only VA Income?

Yes. Many Florida Chapter 7 cases are filed by veterans whose only income is VA disability or pension benefits.

As long as:

• Your income is primarily excluded benefits, and

• Your expenses are reasonable,

Chapter 7 is often available and appropriate.

Key Takeaways: VA Income and Chapter 7 Bankruptcy

• VA disability and pension benefits are excluded from the means test

• VA income is generally protected from creditors

• Military retirement pay is treated differently

• Each case depends on total household income and expenses

Speak With a Tampa Chapter 7 Bankruptcy Attorney

VA income rules are federal, but how they apply in your case depends on Florida practice and proper filing strategy.

If you’re a veteran in the Tampa Bay area and are unsure whether your VA benefits affect Chapter 7 eligibility, speaking with an experienced bankruptcy attorney can give you clarity before you file.

Contact a Tampa Chapter 7 bankruptcy attorney today to protect your benefits and get a fresh financial start.